Plants Plus operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Plants Plus has $5, 100,000 in assets. Its yearly fixed costs are $625,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.70. Plants Plus' volume is currently 510,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.00 each. Garden centers then mark them up to sell to the public for $9 to $12, depending on the type of plant. Read the requirements. i Requirements - X Requirement 1. Plants Plus' owners want to earn an 11% return on investment on the company's assets. What is Plants Plus's target full product cost? 1. Plants Plus' owners want to earn an 11% return on investment on the company's assets. What is Less: Plants Plus's target full product cost? Target full product cost 2. Given Plants Plus' current costs, will its owners be able to achieve their target profit? 3. Assume Plants Plus has identified ways to cut its variable costs to $1.55 per unit. What is its new Requirement 2. Given Plants Plus' current costs, will its owners be able to achieve their target profit? target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit? 4. Plants Plus started an aggressive advertising campaign strategy to differentiate its plants from those Begin by calculating Plants Plus' current full product cost. grown by other nurseries. Plants Plus does not expect volume to be affected, but it hopes to gain more control over pricing. If Plants Plus has to spend $145,000 this year to advertise and its variable costs continue to be $1.55 per unit, what will its cost-plus price be? Do you think Plants Plus will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Plus: Current full product cost Print Done Plants Plus's current full product costs are its target full product cost, therefore Plants Plus be able to acheive its target profit. Requirement 3. Assume Plants Plus has identified ways to cut its variable costs to $1.55 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit? Begin by calculating Plants Plus' new target fixed cost. Less: Target fixed cost Will this decrease in variable costs allow the company to achieve its target profit? Since the company's actual fixed costs are the new target fixed cost amount, Plants Plus be able to achieve its target profit without having to take any other cost cutting measures. Requirement 4. Plants Plus started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Plants Plus does not expect volume to be affected, but it hopes to gain more control over pricing. If Plants Plus has to spend $145,000 this year to advertise and its variable costs continue to be $1.55 per unit, what will its cost-plus price be? Do you think Plants Plus will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Begin by calculating the cost-plus price per unit. (Round your answer to the nearest cent.)Plants Plus operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Plants Plus has $5,100,000 in assets. Its yearly fixed costs are $625,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.70. Plants Plus' volume is currently 510,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.00 each. Garden centers then mark them up to sell to the public for $9 to $12, depending on the type of plant. Read the tequirements Plus: Current full product cost Plants Plus's current full product costs are its target full product cost, therefore Plants Plus be able to acheive its target profit. Requirement 3. Assume Plants Plus has identified ways to cut its variable costs to $1.55 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit? Begin by calculating Plants Plus' new target fixed cost. Less: Target fixed cost Will this decrease in variable costs allow the company to achieve its target profit? Since the company's actual fixed costs are the new target fixed cost amount, Plants Plus be able to achieve its target profit without having to take any other cost cutting measures. Requirement 4. Plants Plus started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Plants Plus does not expect volume to be affected, but it hopes to gain more control over pricing. If Plants Plus has to spend $145,000 this year to advertise and its variable costs continue to be $1.55 per unit, what will its cost-plus price be? Do you think Plants Plus will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Begin by calculating the cost-plus price per unit. (Round your answer to the nearest cent.) Plus: Full product cost Plus: Target revenue Divided by: Cost-plus price per unit Do you think Plants Plus will be able to sell its plants to garden centers at the cost-plus price? Why or why not? If the advertising campaign is effective, Plants Plus be able to sell its plants to garden centers at this price because it is than the $4.00 that Plants Plus previously charged
